Making Work Pay


The Archbishop writes in today's Independent on the importance of re-establishing the principle of making work pay. His article follows in full: 

We need to re-establish the principle of making work pay. The economic recovery provides us with the ideal opportunity to do so.

Last year as I lamented the inequality of Britain's wage distribution on Andrew Marr's sofa, I found I had an unlikely ally. "I am on the same page as the Archbishop", my fellow guest said, "in terms of reducing the gap between the rich and the poor." The gentleman on the sofa next to me was George Osborne and I was very happy to hear that low pay and wage inequality are issues that the Chancellor of the Exchequer takes seriously. It is imperative that we all do the same.

I was talking about the Living Wage Commission, an independent inquiry that I am chairing on the future of the Living Wage - a basic but socially acceptable income - and how we can address low pay in the UK. Today, we release our first report on the scale of the problem of low pay in Britain. Over the coming months we will look at how we can provide solutions to the rise of low pay and working poverty, and the potential the Living Wage holds for Britain's working poor.

The problem facing the country now is one that strikes to the heart of the moral fabric of our society. For the very first time the majority of households in poverty in Britain have at least one person working. The nature of poverty in Britain is changing dramatically. Work is no longer a route out of poverty for millions of hard-pressed people.

It used to be the case that work was the gateway to independence and served as the means to provide for the family. However, the millions of people in low paid employment are having to rely on benefits and debt to get by. The Trussell Trust, the organisation that runs food banks across the UK, are now reporting that people at work are turning up to collect food packages in their lunch breaks. It is no longer guaranteed that work alone is enough to provide for a family.

Low pay is a scourge on our society, and we all pay for it. Low pay costs the taxpayer between 3.6 and 6 billion pounds a year in tax credits, in-work benefits and lost tax receipts. And as disposable income available to the lowest paid reduces, so too does the demand in the economy.

Yet some employers are showing what it means to make work pay. The Living Wage Foundation have accredited more than 500 employers, including six FTSE 100 companies, who now pay all of their staff at least £7.65 an hour, or £8.80 in London.

Support for the Living Wage extends right to the top of Government. Only last month the Prime Minister told an audience at the World Economic Forum that he supported employers paying a Living Wage. But despite the comments of the Prime Minister and the Chancellor, the majority of Government departments are yet to implement the Living Wage in their own workplaces. Without a Living Wage, these warm words are not making a difference to the lives of the five million low paid workers.

Together we must set about rebuilding the moral fabric of our society. We need to re-establish the principle of making work pay. We need to re-establish the notion that a hard day's work can put food on the table, a roof over our heads and provide us with the time to spend with our families. These are the values of the Living Wage, and the employers – public or private – that can pay a Living Wage must.

If we are serious about making work pay, we need to be serious about an end to poverty wages.